A rainy day fund is a type of emergency fund. A rainy day fund is typically a few hundred dollars to $2,000 to cover short-term expenses and one-time unforeseen events. For instance, you need to change your car’s tires or fix the broken furnace.
Your rainy day fund can help you avoid using credit cards to pay for unplanned expenses. It provides you peace of mind and quick access to cash to set things right.
- Open a savings account with your existing financial institution and title it Rainy Day Fund.
- Transfer $500-$2000 into the account or make automatic transfers each payday until you have reached your goal.
- After using the money in the fund, you’ll want to replenish the account.
- Review and revise your rainy day fund requirements. Your life and finances change so you’ll want to ensure your fund reflects those changes.